Coal ministry slaps notice on three Sponge Iron firms

The Ministry of Coal has slapped a showcause notice on Tata Sponge Iron Ltd, Scaw Industries Ltd and SPS Sponge Iron Ltd for the inordinate delay in development of the Radhikapur (east) coal block under the command area of Mahanadi Coalfields Ltd (MCL) in Orissa.

The coal block was jointly allocated to three companies on February 7, 2006. In its showcause notice dated November 4, the MoC has directed the companies to respond to the notice within 30 days failing which it would be presumed by the ministry that the companies have no explanation to offer and appropriate action would be taken for de-allocation of the said coal block.

The coal block was allocated to these companies in accordance with the provisions contained in the Coal Mines (Nationalization) Act of 1973, subject to certain conditions.

One of the conditions of the allocation was that coal production from the captive block should begin within 36 months (42 months in case the area is under forest land) in case of open cast mine and in 48 months (54 months in case the area is under forest land) in case of under ground mine.

In order to expedite the development of the coal block, various review meetings were held from time to time with the representatives of the three companies. The progress of the coal block was reviewed in the meeting held on March 25, 2008 and it was noticed by the ministry that all milestones except submission of Mining Plan were pending.

In the review meeting held on June 22-23 last year, the company had assured to start coal production by the last quarter of 2010-11.

However, in the last review meeting held on July 20-21 this year, the ministry noted that all important milestones such as Environment Management Plan (EMP), Mining Lease, forest clearance and land acquisition are still pending for the coal block.

The ministry inferred that the companies have repeatedly failed to keep their promises and are non-serious about the timely development of the block.

The companies had slipped by one year in submission of the mining plan and land acquisition for the project which was scheduled for completion by February 2009 is still pending.